This week, James Brokenshire MP announced that more than 40 leading housebuilders and freeholders have signed a pledge to stop leaseholders being trapped in unfair and costly deals.
Once upon a time, the majority of new build houses were freehold – you purchased the house and the land it sits on, and that is solely yours until the day it’s sold to someone else. In recent years however, greedy developers have decided that they can make more money out of their house buyers, by treating them in the same way they have treated flat buyers for generations - by making their house leasehold, and charging them ground rents and services charges that seem to spiral out of control the longer you own your home. Especially when the freehold is sold to a new company.
The new industry pledge will help protect the purchasers of leasehold properties from these practices and enable them to take unscrupulous housebuilders and freeholders to court, without the fear of footing their legal bill to the tune of £10,000’s – even if the leaseholder wins!
One of the main aspects that the pledge looks to eliminate is the ‘doubling clauses’, where the ground rent doubles every ‘X‘ amount of years. I know from personal experience that a lot of my vendors who own flats in old London mansion blocks struggle to sell or achieve the price that they are looking for, due to extortionate monthly charges that any new purchaser has to budget for when offering on the property.
If someone robbed an elderly or vulnerable person in the street, we would all step up to protect them and rightly so. Some developers of retirement homes have been doing just this for years by way of ‘event-fees’…. basically, increasing the charges to the leaseholder in the event of them becoming ill or passing away. What we now need is a blacklist of these freeholders and developers to name and shame them for the thieves they are. We can call it the ‘Schadenfreude List’.
Along with the pledge, we need to ensure that this is the first steps to pass the motion into law, not only with future leaseholders, but with current leaseholders who are stuck in their contracts too.